Notes to the consolidated financial statements

2.7 Financial instruments

Financial instruments by category

The carrying value and fair value of financial instruments by categories as of March 31, 2011 were as follows :

in Rupee Symbolcrore

Loans and receivables

Financial assets / liabilities at fair value through profit and loss

Available for sale

Trade and other payables

Total carrying value / fair value

Assets

Cash and cash equivalents (refer note 2.1)

16,666

16,666

Available-for-sale financial assets (refer note 2.2)

44

44

Investment in certificates of deposit

123

123

Trade receivables

4,653

4,653

Unbilled revenue

1,243

1,243

Prepayments and other assets (refer note 2.4)

727

727

Derivative financial instruments

66

66

Total

23,412

66

44

23,522

Liabilities

Trade payables

44

44

Client deposits

22

22

Employee benefit obligations (refer note 2.8)

399

399

Other liabilities (refer note 2.10)

1,678

1,678

Liability towards acquisition of business on a discounted basis (refer note 2.10)

43

43

Total

2,186

2,186

The carrying value and fair value of financial instruments by categories as of March 31, 2010 were as follows :

in Rupee Symbolcrore

Loans and receivables

Financial assets / liabilities at fair value through profit and loss

Available for sale

Trade and other payables

Total carrying value / fair value

Assets

Cash and cash equivalents (refer note 2.1)

12,111

12,111

Available-for-sale financial assets (refer note 2.2)

2,556

2,556

Investment in certificates of deposit

1,190

1,190

Trade receivables

3,494

3,494

Unbilled revenue

841

841

Derivative financial instruments

95

95

Prepayments and other assets (refer note 2.4)

583

583

Total

18,219

95

2,556

20,870

Liabilities

Trade payables

10

10

Client deposits

8

8

Employee benefit obligations (refer note 2.8)

302

302

Other liabilities (refer note 2.10)

1,452

1,452

Liability towards acquisition of business on a discounted basis (refer note 2.10)

40

40

Total

1,812

1,812

Fair value hierarchy

Level 1

Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

Level 3

Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2011 :

in Rupee Symbolcrore

As of March 31, 2011

Fair value measurement at end of the reporting period / year using

Level 1

Level 2

Level 3

Assets

Available-for-sale financial asset – investments in liquid mutual fund units (refer note 2.2)

21

21

Available-for-sale financial asset – investments in unlisted equity instruments (refer note 2.2)

23

23

Derivative financial instruments – gains on outstanding foreign exchange forward and option contracts

66

66

The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2010 :

in Rupee Symbolcrore

As of March 31, 2010

Fair value measurement at end of the reporting period / year using

Level 1

Level 2

Level 3

Assets

Available-for-sale financial asset – investments in liquid mutual fund units (refer note 2.2)

2,518

2,518

Available-for-sale financial asset – investments in unlisted equity instruments (refer note 2.2)

38

38

Derivative financial instruments – gains on outstanding foreign exchange forward and option contracts

95

95

Income from financial assets or liabilities that are not at fair value through profit or loss is as follows :

in Rupee Symbolcrore

Year ended March 31,

2011

2010

Interest income on deposits and certificates of deposit

1,133

779

Income from available-for-sale financial assets

23

160

1,156

939

Derivative financial instruments

The Company uses derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes in foreign exchange rates on trade receivables and forecasted cash flows denominated in certain foreign currencies. The counterparty for these contracts is generally a bank or a financial institution. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace. The following table gives details in respect of outstanding foreign exchange forward and option contracts :

 

As of

As of

March 31, 2011

March 31, 2010

In million

In Rupee Symbolcrore

In million

In Rupee Symbolcrore

Forward contracts

In U.S. dollars

546

2,433

267

1,199

In Euro

28

177

22

130

In GBP

15

108

11

71

In AUD

10

46

3

12

Option contracts

In U.S. dollars

200

898

2,764

2,310

The Company recognized a net gain on derivative financial instruments of Rupee Symbol56 crore during the year ended March 31, 2011 as against a net gain on derivative financial instruments of Rupee Symbol299 crore during the year ended March 31, 2010, respectively, which are included as other income.

The foreign exchange forward and option contracts mature between 1 to 12 months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the Balance Sheet date :

in Rupee Symbolcrore

As of March 31,

2011

2010

Not later than one month

435

280

Later than one month and not later than three months

649

825

Later than three months and not later than one year

1,680

1,205

2,764

2,310